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When challenged by a sluggish economy, slim profit margins and the familiar refrain to do more with less; it may not seem like the right time to consider changing your ERP Distribution system. But in fact, it could be the perfect time when you consider what greater efficiencies could mean for your business.
- Would you benefit from automated inter-company processing along with multi-currency to manage unrealized gains and losses from exchange rate fluctuations?
- How much would customer satisfaction increase if you could reduce backorders through automated forecasting providing sophisticated inventory replenishment with system-calculated demand, safety stock and lead times? How much would profits increase?
- Would you benefit from pick tickets that direct a picker more efficiently - right down to the pick bin?
- How much could be saved if your ERP Warehouse system could manage wave picking during heavy volume and priority, multi-order picks based on shipping requirements?
I work with distributors who have outgrown entry level systems and simply cannot afford a tier one ERP solution which is costly both in terms of price and time (given the lengthy implementation process - sometimes stretching beyond 12 months). I also work with U.S. based companies with subsidiaries in Latin America that need to consolidate financials and implement GAAP and SOX compliance throughout the corporation.
I've learned that, in addition to a solid, midrange ERP solutions, it's important to have staff knowledgeable on both the software and distribution operations, but also bilingual skills to assist with Latin American ERP installations. That combination of skills usually means implementations can be completed in 4 - 6 months, compared to the much longer implementation time required with tier one ERP solutions. A bilingual staff means better communications with all the stakeholders involved in the implementation - and that translates to quicker adoption of the new system and its efficiencies.
Here are just four areas of your distribution workflow that will see positive results:
- Forecasting and Replenishment - Let the system automatically provide you the data to strike the right balance between optimal inventory turnaround and maintaining adequate stock levels to match customer demand. With the system tracking overhead costs and optimal purchase levels for vendors you can combine orders to receive the best discounts from your vendors while keeping overhead costs at a minimum. The system is designed to factor seasonal cycles, sales history data, and lead time when determining appropriate levels of inventory and minimizing carrying costs.
- Inventory Management - Cost methodology may be customized by warehouse. Inventory pricing can be defined by customer type or warehouse location and supports price breaks based on quantity, weight, volume, or monetary amount; effective and expiration dates; and promotions. You will have the ability to analyze, organize and track sales history and inventory transactions by warehouse and select from actual, average, standard, FIFO, or LIFO costing measures.
- Multiple Returns - Multiple return policies are easily managed through the system allowing you to determine if return material authorizations (RMAs) are required. Customers can return items from multiple orders on one RMA, even if you shipped from different warehouses, saving time for both your customers and employees.
- Warehouse Management - in-transit warehouses and replenishment logic is used for three-step inventory transfers. You can drive demand backward to source warehouses while tracking the internal supply chain as supplies move from warehouse to warehouse. Advanced zone and wave picking capabilities minimizes employee movement while significantly increasing the number of orders that can be picked during each shift.
It may be time to think about making an investment now to better equip your warehouse team and management with a more streamlined and effective workflow. If you've gotten to a point where everyone is working harder and smarter, but the business is still challenged by not fully optimizing margins, high administrative and carrying costs, and customer service issues are more numerous than you'd like, now might be the time for change.
Ralph Ceccarelli is Vice President at Southeast Computer Solutions in Miami, specializing in implementing ERP, manufacturing, distribution, warehouse management solutions for businesses in the U.S., Latin America and the Caribbean. He has been helping businesses stay in business for more than 20 years. For more information on improving your ERP systems and leveraging technology please call 305-556-4697 or visit http://www.southeastcomputers.com.
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